European Economic New Era: Progress Challenges and Policy

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The advancement of information technology has propelled the U.S. economy to exhibit a phenomenon characterized by “high growth, low unemployment, and low inflation,” commonly referred to as the new economy. According to assessments of the new economy’s contribution to economic growth and productivity, the European Union (EU) lags behind the United States by approximately five years. There are two primary explanations for this disparity. First, the United States possesses a comparative advantage in both the production and application of information technology within its industry. Second, institutional rigidity within the EU’s economy impedes the development and implementation of information technology. In response to these challenges, the EU has initiated efforts focused on two key areas: economic structural adjustment and advancements in science and education. Consequently, it has proposed various initiatives including an e-Europe plan, a financial services action plan, a venture capital action plan, a strategy for establishing a European research area, and labor market reform plans aimed at vigorously developing its new economy. The goal is to strive towards catching up with or surpassing the level achieved by the United States.

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